Exhibit 10.19


 


EXECUTION COPY


	
   

  



 


ESCROW AGREEMENT


 


by and among


 


SG AMERICAS SECURITIES HOLDINGS, INC.,


 


COWEN GROUP, INC.


 


COWEN AND COMPANY, LLC


 


and


 


JPMORGAN CHASE BANK, N.A.


 


Dated as of July 12, 2006


	
   

  



 

















 


This
ESCROW AGREEMENT (this “Agreement”), dated as of July 12, 2006, is
by and among SG AMERICAS SECURITIES HOLDINGS, INC., a Delaware corporation (“SGASH”),
COWEN GROUP, INC., a Delaware corporation (“Cowen Inc.”), COWEN AND
COMPANY, LLC, a Delaware limited liability company (“Cowen LLC”) and
JPMORGAN CHASE BANK, N.A., a national banking association (the “Escrow Agent”).
Capitalized terms which are used but not otherwise defined in this Agreement
have the meaning assigned to such terms in the Separation Agreement (as defined
below).


 


WHEREAS,
SGASH, Cowen Inc. and Cowen LLC are parties to that certain Separation
Agreement, dated as of July 11, 2006 (the “Separation Agreement”),
pursuant to which the Cowen Business is separated from the SGASH Business (the “Separation”);


 


WHEREAS,
SGASH, Cowen Inc. and Cowen LLC are also parties to that certain
Indemnification Agreement, dated as of the date hereof (the “Indemnification
Agreement”) pursuant to which SGASH has agreed to indemnify Cowen LLC
against, among other things, any liability Cowen may incur in respect of
certain specified contingent liabilities identified in Schedule 2.02(b) to
the Separation Agreement (the “Contingent Liabilities”) to the extent
such liabilities are not paid out of the Escrow Fund (as defined below);


 


WHEREAS,
in connection with the Separation, Cowen LLC will deliver to the Escrow Agent
$72,315,741 in cash, which amount equals the amount of the Closing Litigation
Reserve, as such term is defined in the Separation Agreement (the “Initial
Escrow Amount”);


 


WHEREAS,
the Initial Escrow Amount shall be held pursuant to the terms and conditions of
this Agreement;


 


WHEREAS,
the funds held by Escrow Agent from time to time pursuant to this Agreement,
together with all income accrued thereon which has not been distributed
pursuant to this Agreement, are collectively referred to herein as the “Escrow
Fund.”


 


NOW,
THEREFORE, in consideration of the mutual undertakings contained herein, the
parties hereto agree as follows:


 


1.             Appointment of Escrow Agent;
Creation of Escrow Fund. SGASH, Cowen Inc. and Cowen LLC hereby
appoint the Escrow Agent to serve as escrow agent under the terms of this
Agreement. Cowen LLC will deliver the Initial Escrow Amount to the Escrow Agent
to establish the Escrow Fund upon execution of this Agreement. The Escrow Agent
hereby agrees to hold and dispose of the Escrow Fund, and to act as escrow
agent, in accordance with all the terms, conditions and provisions of this
Agreement. The Escrow Fund shall be held as a trust fund and shall not be
subject to any lien, attachment, trustee process or any other judicial process
of any creditor of any party hereto. During the term of this Escrow Agreement,
the Escrow Fund shall be invested and reinvested by the Escrow Agent in the
investment indicated on Schedule I hereto or such other investments as
shall be directed jointly in writing by SGASH and Cowen Inc. and as shall be
reasonably acceptable to the Escrow Agent. In the absence of written
instruction from the parties, hereto regarding an investment, the Escrow Agent
will invest the funds in a JPMorgan Money Market Account.


 

















 


2.             Escrow Account. During the
term of this Agreement, the Escrow Agent shall hold the Escrow Fund in a
segregated account maintained by the Escrow Agent (the “Escrow Account”).
The Escrow Agent shall not dispose of the Escrow Fund except as expressly set
forth in this Agreement or as otherwise instructed in a writing signed by
SGASH.


 


3.             Adjustments; Disbursements
from the Escrow Fund. Except as provided in this Section 3,
the Escrow Agent shall only distribute the Escrow Fund in accordance with the
written instructions of the officers of SGASH set forth on Schedule III
hereto, which may be amended by SGASH from time to time in respect of SG
Persons.


 


(a)           Adjustments to Litigation
Reserve and Escrow Fund. SGASH shall periodically review and, if
appropriate, after consultation with Cowen Inc. and Cowen Inc.’s outside
auditors, adjust the Litigation Reserve Amount and Litigation Reserve
Sub-Amounts (each as defined below) if the adjustment in the reserves for the
Contingent Liabilities to which such Litigation Reserve Amount and Litigation
Reserve Sub-Amount is required in accordance with generally accepted accounting
principles.


 


(b)           Litigation Reserve Amount
and Litigation Reserve Sub-Amounts, Defined.


 


(i)            As used in this
Agreement, “Litigation Reserve Amount” shall mean the Closing Litigation
Reserve, as adjusted from time to time pursuant to Section 3(a) of
this Agreement.


 


(ii)           As used in this
Agreement, “Litigation Reserve Sub-Amounts” shall mean the specified
reserve amounts allocated by SG to each of the matters set forth on Schedule
2.02(b) to the Separation Agreement, which specified amounts shall in
the aggregate equal the Closing Litigation Reserve, as adjusted from time to
time pursuant to Section 3(a) of this Agreement.


 


(c)           Payment of Contingent
Liabilities from Escrow Fund. If at any time prior to
the Termination Date (as hereinafter defined), SGASH reasonably determines in
good faith, in accordance with the Indemnification Agreement and Separation
Agreement, that a Contingent Liability is to be paid or if there is any
judgment or settlement requiring payment that has not been made by SG or SGASH,
SGASH shall provide prompt written notice of such payment to the Escrow Agent
and Cowen LLC (a “Notice of Claim”). Promptly following its receipt of
any Notice of Claim,


 


(i)            the Escrow
Agent shall withdraw from the Escrow Fund and pay to the Person(s) designated
as payee(s) in the Notice of Claim by the due date specified in the Notice
of Claim an amount equal to the lesser of (i) the aggregate amount of the
claims asserted in the Notice of Claim or (ii) the balance in the Escrow
Fund on the date of payment.


 


(ii)           if the Escrow
Fund as of the date the Escrow Agent received the Notice of Claim is less than
the aggregate amount of the claims asserted in the Notice of Claim, SGASH or an
SGASH Subsidiary designated by SGASH shall pay the amount of the shortfall to
the payee(s) designated in the Notice of Claim by the due date specified
in the Notice of Claim.


 


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(iii)          if immediately
after making the payment(s) described in the Notice of Claim, the Escrow
Fund is greater than the Litigation Reserve Amount, as most recently determined
by SGASH pursuant to Section 3(a), SGASH shall instruct the Escrow
Agent to, and the Escrow Agent shall, promptly distribute the amount of the
difference to SGASH or the SGASH Subsidiary designated by SGASH.


 


(d)           Adjustment Disbursement. If at any
time prior to the Termination Date, SGASH, in accordance with Section 3(a),
decreases a Litigation Reserve Sub-Amount, SGASH may instruct the Escrow Agent
to, and the Escrow Agent shall, distribute to SGASH or the SGASH Subsidiary
designated by SGASH, an amount equal to the amount of such decrease.


 


(e)           Statements. Within ten (10) Business
Days following the last day of each calendar month (each a “Month End”)
during the term of this Agreement, the Escrow Agent shall provide to SGASH and
Cowen LLC, at no additional cost, a statement reflecting the dollar amount of
the Escrow Fund, including all income accrued thereon which has not been
distributed, as at the applicable Month End. As used herein, “Business Day”
means any day that is not a Saturday, a Sunday or a day on which the Escrow
Agent is required or permitted to be closed for business.


 


(f)            Return of Interest Earned on
Escrow Fund. Within ten (10) Business Days following the
last day of each calendar quarter (each a “Quarter End”) during the term
of this Agreement, the Escrow Agent shall, without further instructions from
SGASH and in the manner contemplated by Section 3(h) below,
distribute to SGASH any interest earned on the Escrow Fund and not yet
distributed to SGASH as of such Quarter End.


 


(g)           Release of Escrow Fund. On the
Termination Date, the Escrow Agent shall distribute to SGASH an amount equal to
the balance of the Escrow Fund. As used herein, “Termination Date” means
the date on which the Escrow Agent and Cowen LLC receive notice from SGASH in
accordance with Section 7 that SGASH has determined, after
consultation with Cowen Inc. and Cowen Inc.’s outside auditors, that the
Litigation Reserve Amount may be adjusted to Zero U.S. Dollars ($0.00) pursuant
to Section 3(a).


 


(h)           Method of Distributions. Any amount
distributed to SGASH or Cowen LLC pursuant to this Agreement shall be paid in
U.S. Dollars. Unless otherwise instructed by the party to whom funds are to be
released, the Escrow Agent shall liquidate assets in the Escrow Fund to the
extent that sufficient cash is not available in the Escrow Fund at the time any
such distribution is to be made and shall pay the proceeds thereof to SGASH or
Cowen LLC, as applicable, in accordance with this Section 3(h). Unless
otherwise instructed by the party to whom funds are to be released, any
distribution from the Escrow Fund to SGASH or Cowen LLC shall be paid by wire
transfer of immediately available funds to the account and in accordance with
the wire transfer instructions designated for such party on Schedule III
attached hereto or to such other account as SGASH or Cowen LLC, as applicable,
may designate in writing.


 


(i)            Call-Back Schedule. In the event
fund transfer instructions are given, whether in writing, by facsimile or
otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to the person or persons designated on Schedule
III attached hereto, and the Escrow Agent may rely upon the confirmations
of anyone purporting to be the person or persons so designated. The persons and
telephone numbers for call-backs and


 


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signatures for the fund
transfer instructions set forth for a party on Schedule III attached
hereto may be changed only in writing signed by such party actually received
and acknowledged by the Escrow Agent. The Escrow Agent and the beneficiary’s
bank in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by SGASH or Cowen LLC to identify (i) the
beneficiary, (ii) the beneficiary’s bank or (iii) an intermediary
bank. All fund transfer instructions must include the signature of the person(s) listed
on Schedule III attached hereto, as amended from time to time in
accordance with this Agreement. The parties to this Agreement acknowledge that
these security procedures are commercially reasonable.


 


4.             Liability of Escrow Agent. The Escrow
Agent’s duties and obligations under this Agreement shall be determined solely
by the express provisions of this Agreement and the Escrow Agent shall not have
any duties or responsibilities except as expressly provided in this Agreement. The
Escrow Agent shall not be obligated to recognize, and shall not have any
liability or responsibility arising under, any agreement to which the Escrow
Agent is not a party, even though reference thereto may be made herein. With
respect to the Escrow Agent’s responsibility, SGASH, Cowen Inc. and Cowen LLC
further agree that:


 


(a)           The Escrow Agent shall not
be liable to anyone whomsoever by reason of any error of judgment or for any
act done or step taken or omitted by the Escrow Agent, or for any mistake of
fact or law or anything which the Escrow Agent may do or refrain from doing in
connection herewith, except to the extent caused by or arising out of the
Escrow Agent’s gross negligence or willful misconduct. The Escrow Agent may
consult with counsel and accountants of its own choice and execute any of its
powers and perform any of its duties hereunder directly or through agents or
attorneys (and shall be liable only for the careful selection of any such agent
or attorney) and may consult with counsel, accountants and other skilled
persons to be selected and retained by it and shall have full and complete
authorization and protection for any action taken or suffered by the Escrow
Agent hereunder in good faith and in accordance with the opinion of such
counsel or accountants. SGASH, Cowen Inc. and Cowen LLC shall jointly and
severally indemnify and hold the Escrow Agent and its directors, agents and
employees harmless from and against any and all liability and expense which may
arise out of any action taken or omitted by the Escrow Agent in accordance with
this Agreement, except to the extent that a court of competent jurisdiction
determines that the Escrow Agent’s gross negligence or willful misconduct was
the primary cause of any loss. This Section 4(a) shall survive
notwithstanding any termination of this Agreement or the Escrow Agent’s
resignation. Anything in this Escrow Agreement to the contrary notwithstanding,
in no event shall the Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.


 


(b)           SGASH and Cowen LLC may
examine the records pertaining to the Escrow Fund at any time during normal
business hours at the Escrow Agent’s office upon twenty-four (24) hours’ prior
notice.


 


(c)           The provisions of this
Agreement are solely for the benefit of the parties hereto, their successors,
permitted assigns and heirs and to no other person whomsoever.


 


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(d)           No succession to, or
assignment of, the interest of SGASH, Cowen Inc. or Cowen LLC shall be binding
upon the Escrow Agent unless and until written evidence of such succession or
assignment, in form reasonably satisfactory to the Escrow Agent, has been
delivered to and acknowledged by the Escrow Agent.


 


(e)           The Escrow Agent may rely
upon and shall not be liable for acting or refraining from acting upon any
written notices, requests or instructions signed by the proper parties or
bearing a signature or signatures believed by the Escrow Agent in good faith to
be the genuine signatures of the proper parties and shall be under no duty to
inquire into or investigate the validity, accuracy or content of any such
document. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands
from any party hereto which, in its reasonable opinion, conflict with any of
the provisions of this Agreement, it shall notify SGASH and Cowen LLC of such
fact and request that they direct the Escrow Agent in writing as to the appropriate
action.


 


(f)            In case any property held by
the Escrow Agent shall be attached, garnished or levied upon under a court
order, or the delivery thereof shall be stayed or enjoined by a court order, or
any writ, order, judgment or decree shall be made or entered by any court, or
any order, judgment or decree shall be made or entered by any court affecting
the property deposited under this Agreement or any part thereof, the Escrow
Agent is hereby expressly authorized to obey and comply with all writs, orders,
judgments or decrees so entered or issued, whether with or without
jurisdiction, and in case the Escrow Agent obeys or complies with any such
writ, order, judgment or decree, the Escrow Agent shall not be liable to SGASH
and Cowen LLC or to any other person by reason of such compliance in connection
with such litigation. SGASH agrees to pay to the Escrow Agent on demand its
reasonable and documented costs, attorneys’ fees, charges, disbursements and
expenses in connection with such litigation.


 


(g)           The Escrow Agent reserves
the right to resign at any time by giving written notice of resignation to
SGASH, Cowen Inc. and Cowen LLC specifying the effective date thereof, provided
that the Escrow Agent shall continue to perform all of its duties and obligations
set forth hereunder until the distribution of the property held hereunder to a
successor escrow agent. Within sixty (60) days after receiving such notice,
SGASH and Cowen LLC jointly shall appoint a successor escrow agent to which the
Escrow Agent may distribute the property then held hereunder. If a successor
escrow agent has not been appointed and has not accepted such appointment by
the end of such thirty-day period, the Escrow Agent may apply to a court of
competent jurisdiction for the appointment of a successor escrow agent, and
SGASH shall bear all reasonable and documented costs, expenses and attorney’s
fees which are incurred by the Escrow Agent in connection with such proceeding.


 


5.             Compensation of the Escrow
Agent. SGASH agrees to pay the Escrow Agent upon execution of this Agreement
and from time to time thereafter reasonable compensation for services to be
rendered by the Escrow Agent hereunder, which unless otherwise agreed in
writing by SGASH and the Escrow Agent shall be as set forth on Schedule II
attached hereto, and further agrees to pay or reimburse the Escrow Agent upon
request for all reasonable and documented expenses, disbursements and advances,
including reasonable attorney’s fees and expenses, incurred or made by the
Escrow Agent in connection with the performance or any necessary modification
or the termination of this Agreement.


 


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6.             Tax Reporting. SGASH, Cowen
Inc. and Cowen LLC agree to provide the Escrow Agent upon execution of this
Agreement with certified tax identification numbers for each of them by
furnishing appropriate Forms W-9 (or Forms W-8, in the case of non-U.S.
persons) and other forms and documents that the Escrow Agent may reasonably
request (collectively, “Tax Reporting Documentation”). The parties
hereto understand that if such Tax Reporting Documentation is not so certified
to the Escrow Agent, the Escrow Agent may be required by the Internal Revenue
Code, as it may be amended from time to time, to withhold a portion of any
interest or other income earned on the investment of monies or other property
held by the Escrow Agent pursuant to this Agreement. The Parties hereby agree
that notwithstanding the terms of the Separation Agreement or any other
Ancillary Agreement, solely for United States federal income tax purposes (a) the
Escrow Fund shall be treated as funded by a distribution of the Initial Escrow
Amount from Cowen LLC to SGASH prior to the Separation followed by a
contribution of such amount to the Escrow Fund by SGASH and (b) SGASH
shall be treated as the owner of the Escrow Fund assets. Accordingly, SGASH
shall include in its Tax Returns all income, gain, losses, deductions and
credits with respect to the Escrow Fund assets. This Section 6
shall survive notwithstanding any termination of this Agreement.


 


7.             Notices. Any notice,
request, demand or other communication given by any party under this Agreement
(each a “notice”) shall be in writing, may be given by a party or its
legal counsel, and shall be deemed to be duly given (i) when personally
delivered or (ii) upon delivery by an internationally recognized express
courier service which provides evidence of delivery or (iii) when four (4) Business
Days have elapsed after its transmittal by registered or certified mail,
postage prepaid, return receipt requested, addressed to the party to whom
directed at that party’s address as it appears below or another address of
which that party has given notice or (iv) when delivered by confirmed
facsimile transmission if a copy thereof is also delivered in person or by
overnight courier. Notices of address change shall be effective only upon
receipt notwithstanding the provisions of the foregoing sentence.


 


Notices
to SGASH:


 


Société
Générale


1221
Avenue of the Americas

New York, New York 10020

Attn:  General Counsel, SG Americas


Facsimile:
 (212) 278-7432


 


with
a copy (which shall not constitute notice to SGASH) to:


 


Mayer,
Brown, Rowe & Maw LLP

1675 Broadway

New York, New York  10019

Attn:  James B. Carlson

Facsimile:  (212) 262-1910


 


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Notices
to Cowen and Cowen LLC:


 


Cowen
Group, Inc.

1221 Avenue of the Americas

New York, New York 10020

Attn:  General Counsel

Facsimile:  (646) 562-1861


 


with
a copy (which shall not constitute notice to Cowen) to:


 


Skadden,
Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY  10036-6522

Attn: Lou R. Kling

         Thomas W. Greenberg

Facsimile: (212) 735-2000


 


Notices
to Escrow Agent:


 


JPMorgan
Chase Bank, N.A.


Worldwide
Securities Services


4
New York Plaza, 21st Floor


New
York, NY 10004

Attention:  Glenn Sturman


Facsimile:  (212) 623-6168


 


Notwithstanding the above,
in the case of communications delivered to the Escrow Agent pursuant to clause
(ii) or (iii) of this Section 7, such
communications shall be deemed to have been given on the date received by the
Escrow Agent. In the event that the Escrow Agent, in its sole discretion, shall
reasonably determine that an emergency exists, the Escrow Agent may use such
other means of communication as the Escrow Agent deems appropriate, provided
that such notice shall be effective only upon actual receipt by the intended
recipient.


 


8.             Binding Effect; Assignment. This
Agreement and all of the provisions hereof will be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.


 


9.             Severability. If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term of this Agreement, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance from this
Agreement.


 


10.           No Strict Construction. The language
used in this Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction
will be applied against any person.


 


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11.           Headings. The headings
used in this Agreement are for convenience of reference only and do not
constitute a part of this Agreement and will not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all
provisions of this Agreement will be enforced and construed as if no heading
had been used in this Agreement.


 


12.           Counterparts. This
Agreement may be executed in two or more counterparts, any one of which need
not contain the signatures of more than one person, but all such counterparts
taken together will constitute one and the same instrument.


 


13.           Governing
Law. All issues and questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. In furtherance of the foregoing, the internal
law of the State of New York shall control the interpretation and construction
of this Agreement, even though under that jurisdiction’s choice of law or
conflict of law analysis, the substantive law of some other jurisdiction would
ordinarily apply.


 


14.           Account Opening Information. IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT IN THE UNITED STATES
AND/OR FOR NON-U.S. ACCOUNTS:  To help
the government fight the funding of terrorism and money laundering activities,
federal law requires all financial institutions to obtain, verify and record
information that identifies each person who opens an account. When an account
is opened, the Escrow Agent will ask for information that will allow it to
identify relevant parties.


 


15.           Merger of Escrow Agent. Any
corporation into which the Escrow Agent in its individual capacity may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Escrow
Agent in its individual capacity shall be a party, or any corporation to which
substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Agreement without further act, provided that, upon any merger,
conversion, consolidation of the Escrow Agent or transfer of its interest in
this Agreement or its corporate trust business, SGASH and Cowen may mutually
agree in writing to appoint a replacement escrow agent.


 


16.           Force Majeure. In the event
that any party hereto is unable to perform its obligations under the terms of
this Agreement because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other cause reasonably
beyond its control, the Escrow Agent shall not be liable for damages to the
other parties for any damages resulting from such failure to perform otherwise
from such causes. Performance under this Agreement shall resume when the Escrow
Agent is able to perform substantially.


 


*       *       *       *


 


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IN
WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement on the
day and year first above written.


 


	
   

  	
  SG AMERICAS SECURITIES
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean-Philippe
  Coulier

  
	
   

  	
  Name:

  	
  Jean-Philippe Coulier

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher A.
  White

  
	
   

  	
  Name:

  	
  Christopher A. White

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COWEN AND COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher A.
  White

  
	
   

  	
  Name:

  	
  Christopher A. White

  
	
   

  	
  Title:

  	
  Chief Administrative
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Saverio A.
  Lunetta

  
	
   

  	
  Name:

  	
  Saverio A. Lunetta

  
	
   

  	
  Title:

  	
  Vice President

  



 


Escrow Agreement